What is a short sale?

A short sale occurs when the sale price of your property is less than the amount you owe on your mortgage(s). In this situation, your lender agrees to accept the proceeds of the sale as full payment for your mortgage, even though the amount is less than what you owe. This is often an option when you’re facing financial hardship and want to avoid foreclosure.

The Process of a Short Sale:

1. Consultation and Decision:
   • Before proceeding, we’ll review your financial situation to determine if a short sale is your best option. It’s important to understand that the lender will need proof of your financial hardship, so we’ll gather necessary documentation, such as income statements, tax returns, and a hardship letter explaining your situation.
2. Listing the Property:
   • Once we’ve determined a short sale is a viable option, we’ll list the property for sale. I’ll price the home competitively and market it effectively to attract buyers, while also ensuring we keep the lender informed of the process.
3. Receiving Offers:
   • As offers come in, I’ll present them to you, and we’ll review them together. However, even after we agree on an offer, the sale won’t proceed until the lender(s) review and approve it.
4. Lender’s Approval:
   • After we receive an offer, I will submit it to your lender(s), along with all required documentation (such as your financial hardship letter and supporting documents). The lender(s) will review the offer to ensure it makes sense given your financial situation and the property’s market value.
   • During this time, the lender may request more documents or even an updated financial statement, which can sometimes delay the process.
5. Negotiation with the Lender:
   • Sometimes the lender might negotiate the terms, such as asking for a higher sale price or more from you (in terms of a contribution or cash settlement). I’ll work closely with the lender to ensure their terms are reasonable and fair.
6. Approval and Closing:
   • Once the lender approves the offer, we move to the escrow process. This includes buyer inspections, appraisals, and finalizing financing. The buyer will typically need 30-45 days to complete this stage, and once everything is ready, we’ll close the sale.

Expected Timeline:

• Listing and Offers: This can take 1-3 weeks to get offers, depending on market conditions.
• Lender Review: This is the most time-consuming part. It can take anywhere from 30-60 days, and in some cases, it may take longer (up to 3-4 months) if the lender is slow or if there are multiple lenders involved.
• Approval and Closing: After receiving approval from the lender, it generally takes about 30-45 days to complete the closing process.

Considerations and What You Need to Know:

• Lender’s Approval: The biggest challenge is that the lender must approve the sale, and there’s no guarantee they will. They will only approve the sale if they believe it’s the best option for them. This means they might reject the first offer, especially if they feel the price is too low.

• Impact on Your Credit: While a short sale is less damaging to your credit than a foreclosure, it can still have a negative impact. However, it’s generally seen as a better alternative to foreclosure in terms of future credit recovery.

• No Deficiency Judgment: In some cases, the lender may agree to forgive the difference between the sale price and what you owe (called a deficiency judgment). This depends on negotiations and the specific terms of your loan. I will work to ensure the lender doesn’t pursue you for that leftover balance.

• Property Condition: Buyers may request repairs or a reduction in price if the property isn’t in top condition. We’ll need to be prepared for potential negotiations around the sale price, especially if repairs are needed.

Benefits and Risks for You as the Seller:

Benefits:

• Avoid Foreclosure: A short sale allows you to avoid the more serious consequences of foreclosure and can help minimize damage to your credit.
• Exit Strategy: If you’re in financial distress, this provides a way out without the severe legal and financial impact of foreclosure.

Risks:

• No Guarantee: The lender isn’t required to approve a short sale, so the process may take longer than expected and could result in the offer being rejected.
• Deficiency Judgment Risk: Depending on the lender, they may still pursue a deficiency judgment, though we will work to negotiate this away.

Ultimately, the short sale process is an opportunity to avoid foreclosure and settle your debt, but it does require patience and cooperation with the lender. I’ll be here every step of the way to ensure everything runs as smoothly as possible, and I’ll keep you informed of every update. Let’s work together to get your home sold in the best possible way, and with the least amount of financial impact on you.

Jennifer Harper | Executive Realty Services | S.0168752 | LasVegasHomesByJennifer